Wednesday, February 12, 2014

Investing With Cryptocoins: an illustrative personal report on experience with BSVM

All this aside : you can’t invest with Cryptostocks for the same reason you can’t swim in the desert, you can’t invest with Cryptostocks for the same reason you can’t sunbathe at night. You can’t invest with Cryptostocks because it can’t be done, nobody can do it.

I will not make the ordinary error of dismissing the man for what seems to be linking economic superiority or definiteness of contract with race , but rather limit myself for now to the quote above. To use the nerdspeak, it seems to be flamebait or FUD, and a mere assertion based on dismissing what he sees as dismal intelligence or precautions or thinking regarding investment in cryptocoin related projects (and that's not altogether a bad read--it's worth seeing real screw-ups there). A primary problem with his "you can't do it" is, I've done it: but more to my own point or "lesson" here, Cryptostocks hosts projects that actually do offer real services in the world, with real gains, whether it's mining (aka partially that is processing bitcoin transactions for a fee) or it is trading et cetera, meaning that it isn't gambling[gambling] .

It's investing--getting paid for funding useful work in the real world which, though not guaranteed, might give returns. I have made more money on Cryptostocks in the form of dividends and gains for about the same price as stock that I hold in a Fortune 200; I worked there and got their stock below-market-price as a perk yet despite my price advantage as a worker there, it is years later and I have made about $6 in dividends (and lost value). Let's compare what has happened on Cryptostocks.
When I first began writing this article:

In Bitcoin, I had paid .374804 BTC

(.19+(.092402*2))

for a total of three shares in two projects from total deposits of .399BTC

(.20+.069+.13)

and have a total balance of .036217 BTC left with no withdrawals.

With .399-.374804 I was left with .024196 BTC before any gains, meaning

that of .036217 on balance .012021BTC is profit

.036217-(.399-(.19+(.092402*2))).

That means that with the swinging $ exchange rate for BTC, while I've held these shares I have made between

$9-$12 bucks, or around 3.8% and

in only a few months: that's notbad.

As of my later editing this article for final publication, I'm up to around $40 with more like $700 used to purchase bitcoin, meaning a return of around 5.7%, which means the returns are actually quite strong.

The real challenges though, include that these projects and activities are being run by amateurs, people who know their rights and wield them, but aren't necessarily going to be let alone by the powers that be, who even if their harmless would probably like to not just take a pie, but punish anyone who won't do all as they have declared is necessary to operate; that there can be trust deficits, and that any actions that break trust--because like it or not norms of stockholder-company relations will prevail to some extent, maybe rightly due to their long history and development as customs--will cause losses that might be difficult to repair by "illterate dorks with computers" (see articles linked above), of which I have a good example below, related to a certain project.

One project that has been giving magnificent returns is "Bitsmithvirtualmining" (BSVM). It has been undervalued relative to its history and compared to the other projects, meaning it has been a steal: usually going for around .075BTC, for every share it has consistently returned around .0002xxxxxx. Often that .0002xxxxxx means that having 3 shares makes you around fifty cents every three days. The ordinary person may scoff at such an idea, but if we take one divident times three:

0.00027963*3

which gives .00083889BTC or about 58.7 cents (if BTC is valuated at $700 as a rough measure) that means this "stock" at that divident would payout

(365/3)*((0.00027963*3))

or .10206495BTC per year, at $700/BTC that is

((365/3)*((0.00027963*3)))*700

or

$71.445465.

Taking that rough .075BTC per share three shares cost approximately $157, making that total a ~45.506% return per annum, which is...incredible. Yet it's the consequence of keeping-up with the mining and building-out that infrastructure in a very new market. Note that's not including the rise in value for the cryptostock...

Except...the market price at which it trades fell because of one of those "illiterate dorks": of that "trust" issue mentioned above. The article linked above detailed the chat log of what its author mockingly calls "financiers" (mocked) and discussion about an exchange that opened in a legal gray area and closed when the powers that be became not-so-gray about it, and it was illustrative of problems he has legit concerns about. He was not mocking anyone for starting-up in a new field with uncertainties, but their financial and investment illiteracy, and the catastrophic results. Read the log and you will find the way a single person breaking trust can really harm a project (in that case, terminate it), and I have a recent example of someone causing suspicion and hurting a project's reputation--it was BSVM.

One of the admins recently had "an episode" (I was emailing back-and-forth not only with the affected admin, but later another who explained what happened) they think is related to his time in the military; he acted like a child (though they don't like me characterizing this), using the IPO flag of cryptostocks to stop all trades and "block anyone from undercutting my price", in order to sell another $500 shares (to which we had all agreed) but at above the market trading value (at .10BTC). Here is the exchange I had with him on the issue:

Something's going on at cryptostocks, look at the buy and sell orders. Looks bad.

Regards,

Hi john

Read announcement title Round 1 Phase 2 from today

Thanks
BSVM

[The announcement, which was entirely unhelpful, was:

Round 1 Phase 2

Round 1 Phase 2 is now up there will be no other sale and buys until these shares are all sold, dividend is waiting confirmations[flag]

Ah,

That said, not actually sure that's legal in either US or UK. x*D I actually lived with a Federal level auditor and investigator and asked, he thinks not, so be careful man. Regardless of Cryptostocks, without some pre-defined agreements mutually understood and abided by all sides that kind of thing is held as questionable.

Oh, and you might want to consider a vote or something on those, as the price you set is pretty far above what the stock was trading for the last few days, that or figure-out a way to up the BTC production/dividends to convince folks its worth it: but by blocking normal trades you've cut-off the means for existing or potential stockholders alike to measure whether it would be worth their hard-earned .1BTC.

Regards,

the block on buy a sales are only for 500+ share releases by us other then that its back to normal trading after they sell this will mostly be the last block and the highest price we ever sell at they way markets are going and this was needed due to shipments of new hardware come out in the next 60 days we need to keep a edge on things or we fall behind and become a statistic in Bitcoin which we do not want.

Yeah, I get that, it's why I'm not complaining. : ) But you still face two problems:

1. The block removes the pricing mechanism, the market (which I don't say as some love-the-market true-believer), and
2. You haven't announced anything like that so the peeps know what's going on.

Best Regards,

that would have been the announcement on the 6th of feb

this is so much we have to hold back or prices run everywere its just the nature of what we are in one cracked up by gox killed the market almost

Very true--too many people jumped-in not understanding what these things are so they freak-out when someone starts a rumor to protect their company image. x*D

Regards,

[and then]
Maybe I should say, though: we have a presentational problem (I say "we" because of being a shareholder)...

In business you never EVER expect ANYONE, already a customer or else, to be up with the news as it has come out: indeed giant corporations (if you've ever had to work for one) can't get everyone on the page (ever) no matter if everyone's job depends on doing readings and...some announcement in a system somewhere will inevitable be wrong in one way or another so nobody trusts anything.

All said, I suggest you make a couple announcements (some are repetitive) and do the following:

1. Announce purpose of buy-and-sell freeze, as "this is a measure to vastly upgrade the infrastructure and remain on the cutting-edge and competitively leading rather than becoming suddenly obsolete. Take a look and you'll see that compared to other projects here, the combined purchase price of just 2 stocks over the last few weeks is less than, say, Cryptsy, yet gives you a larger payout over the same timeframe. So let people know--.10BTC is a good price (still low), we've been undervalued and the payouts are worth it." [break a second for note below, picks-up after]

Note: basically I've noticed this project can give something like an 8-14% return on money invested, consistently. I just don't put more in than I think is wise at any given modem, given my other obligations.

"Raising more capital for that competitive edge is a decision we thought carefully about, and we've decided we must: in exchange we'll do the following."

2. [if this is possible] "We will be issuing dividends to our shareholders every day rather than every three. Please remind possible newcomers to check the total summed dividends over time rather than just total per dividend, so they evaluate the stock correctly. Also..." [this is up to you]

Of course, make sure you make such announcments over at Bitcointalk, the Bitcoin mags online, etc. Seriously. You need the PR.

Regards,

And much later in the day, with no response to my last mailing:

er...see, all day and no buys: that's a major flaw in the Cryptostocks design, the pricing mechanism is removed with the block in trades. Even worse though, at current stocks trade lower than the .1 you're seeking. I recommend you either do some announcing and evangelizing or change the share amounts (higher) to sell at the current values and make the same amount.

Best Regards,

[...] You're ignoring every known custom or norm, meaning you are harming your mindshare badly. Because such terms as "freezing until new issues sell" isn't listed in the contract page, custom controls (in UK and US alike), meaning you're threatening your listing on Cryptostocks (violating terms).

You need to do this another way if you want to sell those,

Regards,

https://cryptostocks.com/developerlog
feb 1st its a ipo flag

Activating this feature will

prevent people from placing any sell orders

allow users to place only buy orders with a price of greater than or equal to the lowest ask price

In short it allows you to sell your IPO shares without allowing others to place buy orders or under cut your sales price.

Right man, and that's why people aren't buying: if unfettered trading has determined already that the sales price is X-Y and then an arbitrary price X is imposed, what do you think will happen to the market for the good? I personally think the stock is undervalued for the return, but price controls typically don't work in any context, therefore...you need to make that case, without seeming desperate. i.e. market well, I've even been thinking of writing on the returns of BSVM and other stocks on croptostocks, for instance, given the returns being quite good.

Regards,

Finally I got a sane and real reply,

flag is gone by the way

But the damage was done.
Among the announcements FINALLY made:

11 Feb 06:26

IPO Flag

a lot of up set people about the ipo flag, it as been removed

and

11 Feb 08:33

trade stop re-edit

one admin as been fired, nothing is missing and all coins are safe, this trade stop was brought on by that mess within the last hour or 2 that that admin made, everything as been changed they no longer have access to anything. there will be only 2500 total for now the rest will be set in reserve, round 1 phase 2 will be issued at a later date, trading will resume in a few hours.thank youBitsmith Virtual Mining any more questions can be asked in are chat room @ tinychat.com/bsvm

Notice the amateurishness: nothing to make amends, nothing to assure, offer certainty, no real apology. This is a real problem that can plague things like these--the people running projects on Cryptostocks don't realize you have to do a little [censored] when you screw-up that badly. Song-and-dance but...with substance of some sort. In a small span the price trading on their market dropped from around .075 to around where it is now at the time of writing, 0.052618. People won't bid more, so nothing is selling because those who hold the shares bought higher: indeed I would buy higher, I would even buy at .1BTC should the overall price rise: the project has consistently performed well and then some, and with each upgrade of equipment remains competitive, such that I have no lack of faith (given its history) that it could continue to do so. But they did bring the trustworthiness of those running things into jeopardy.
Beforehand, they could have sold the 500 shares for at least .07BTC per, now they they're not only .03BTC off the desired .1 mark but ~.5. A lesson to be learned from this is that like anything in life, try to become controlling (of others' property), even in the name of a greater good, and you will likely harm your own cause: think of all the historical examples economists draw upon to condemn market controls, political manipulation of markets in the name of a greater public good, etc.: look at the 30% instant drop after release of price controls on the Argentine peso (of the same kind of leftist president as her nation-ruinous husband (who was also president) attempted currency controls only to back-off before greater damage and a total collapse occured) that just recently occurred: a bunch of people were held hostage, she hurt her own intent of preserving the value or buying power of their currency, but of course made for a good case why we should no longer put any faith in the "faith and credit" of governments with such unprincipled, unscientific, sociologically stupid people: we (and many of "they" in Argentina) now know what kind of persons are being elected and ordering their agents who actually run things (and who are glad to comply even if it means holding everyone else hostage). Yet such myopia and childishness is common in the elected-powerful, who think by fiat and decree anything can be fixed, or that by controls damage can be limited (rather than shattering already fractured structures).

Of course, if you've held out for the prices to drop and haven't invested what you can't afford (as many do) there's a killer deal to get as others flee in dread (who overbought), and though it's not necessarily going to be a killer return, it can certainly be a reliable one. Whether buying an inflated Argentine peso (that is, if sane economic and government spencdng polices were put in place--not to mention the removal and prosecution of those who told the world it refuses to pay agreed-to contracted loans) or buying BSVM as some perhaps become too scared to keep holding (that is, if BSVM shows that really, truly, that was just a hiccup). That is one thing that can't be taught: don't get scared, do analysis such that sometimes you run in the direction everyone else runs away from, like the Marines only to opportunity rather than the sounds of gunshots.

BSVM will have to do a lot of begging, big shows, wagging tails and jumping on command to bark like dogs, more [censored], and anything else they can imagine to gain that back but, so far, as a small operation they've opted for the opaqueness of a giant corporation. Still, I can hope the sell prices by the the scared start to drop, at which point <.< I'll consider snapping up more. >.> And I am looking forward to that actual issuance of more stock--just at or near the market price. They just don't yet seem to get, though, that they need as a company or operation to take those extra steps not just to give assurance, but to get the market prices high enough that the next issue of stock can be priced high enough to cover the equipment upgrades wanted to keep the project competitive and keep ahead. Part of that is tooting their horn, as high returns (percentwise) should be boasted: the ordinary person doesn't get that .0001 or .0002xxxxx of something...can be significant: it's psychology, but psychology that overruled will make those who do happy they're not the ordinary person.

[gambling] Though there are a ton of shady gambling operations sprouting daily surrounding these coins, hoping to lure some poor shmo into losing his pie. Regulated physically-located casinos attended by warm bodies in the same location are actually required to have third parties set and test the probabilistic algorithsm that control pay-outs: there is no actual randomness, just a rigorous appearance therefore mandated by the State, which gets to set the probabilities in such a way as it desires to manipulate things for tax purposes: an old friend of mine found his first job after getting an electrical engineering degree to be tuning and testing those machines as part of one of those third-party companies, to insure casinos' compliance--who obviously would like to set the significant payouts to be less frequent.
[flag] can be seen here, https://cryptostocks.com/announcements/693

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